Fiscal Year 2017 Employer Contribution Rates

The Alaska Retirement Management Board (ARMB) has established Fiscal Year 2017 (FY17) employer contribution rates for the PERS/TRS Defined Benefit (DB) and Defined Contribution Retirement (DCR) Plans. The rates are effective for pay period end dates between July 1, 2016, and June 30, 2017.

FY17 Defined Benefit Plan Employer Contribution Rates

In setting the DB Plan rates, the ARMB addressed compliance with Senate Bill (SB) 125 [PDF], the PERS "cost-share" bill. In fiscal year 2008, the bill converted the PERS DB plan to a cost-share plan, like TRS, and provided for one integrated system of accounting for all employers. The bill established one uniform rate of 22 percent for PERS employers, rather than separate contribution rates for each employer. SB 125 amended AS 39.35.255 and repeals and reenacts AS 14.25.070:

AS 39.35.255 “Contributions by employers” establishes the uniform contribution rate for PERS employers at 22 percent, with the State contributing the difference between total PERS actuarially determined contributions and the amount employers contribute at 22 percent of payroll. (See AS 39.35.280 Additional State Contributions)

AS 14.25.070 “Contributions by employers” establishes the TRS employer contribution rate at 12.56 percent, with the State contributing the difference between total TRS actuarially determined contributions and the amount employers contribute at 12.56 percent of payroll. (See AS 14.25.085 Additional State Contributions)

FY17 Defined Contribution Retirement Plan Employer Contribution Rates

There is no change in the DCR Plan computation for Fiscal Year 2017. The computation is the same, only the rates have changed. Senate Bill 123 [PDF], the "technical clean-up" bill, requires that the PERS and TRS DB rate be applied to both DB and DCR salaries. However, in some cases, the DB effective rate is not sufficient to cover all required DCR contributions. All DCR Plan employer contribution obligations are required. Employers will pay either the effective rate OR the DCR required rate plus the Health Reimbursement Arrangement (HRA), whichever amount is greater.

The DCR Plan employer rates for the PERS and TRS, are outlined in the tables below:

**Per AS 39.30.370, a rate of 3.00% is applied to the average annual compensation of all employees of all employers in the TRS and PERS. The contribution amount is then converted to a per pay period, per employee contribution amount. Contributions to the employee's HRA account are required for every pay period in which the employee is enrolled in the DCR Plan, regardless of the compensation paid during the calendar year. By definition, the HRA cost is a dollar amount reflected in the table below:

FY 2017 HRA Amounts

Annual

Quarterly

Monthly

Semi-monthly

Bi-weekly

Weekly

$2,049.36

$512.34

$170.78

$85.39

$78.82

$39.41

For full-time TRS members who are paid over a period of less than 12 months, the employer will calculate the amount due per pay period by dividing the annual amount by the number of scheduled payments. For example, for a full-time TRS member who receives:

For TRS part-time employees, the HRA rate is based on the contract percentage worked multiplied by the rate provided in the table above. For example, a 70% employee paid monthly would have a contribution to the HRA of $119.55 per pay period ($170.78 x 70%).

Note: For all school districts the prorated calculation of annual HRA contributions does not apply to PERS DCR Plan Noncertificated (classified) School Employees. These employees are NOT eligible to elect the alternate option program (SB9). Once the DRB PERS system is provided the Leave Without Pay (LWP) date for the last day worked for the school year, service is then turned off and HRA contributions are suspended for the summer break.

For part-time PERS members, the employer contributes the PERS hourly amount for each hour the employee worked in each pay period until the employer has contributed the annual amount for the fiscal year, illustrated in the table below:

FY 2017 HRA Amount

(PERS part-time members)

Hourly

$1.31

*** The Defined Benefit Unfunded Liability (DBUL) amount levied against the DCR Plan payroll is equal to the employer effective rate minus the DCR Plan total employer contributions. See the following PERS example below using occupation code "A" of semi-monthly payroll, where the gross payroll = $1,000.00:

DBUL Amount Example

Rates

Employer amount

Employer contribution

5.00%

$50.00

Retiree Medical Plan

1.18%

11.80

Occupational Death & Disability

0.17%

1.70

Health Reimbursement Arrangement (HRA)

**

85.39

Subtotal Employer contribution

n/a

$148.89

Employer Effective Rate (as required by SB 125)

22.00%

220.00

Subtotal from above (subtract from Effective Rate)

n/a

-148.89

Total Amount posted to DBUL

n/a

$71.11

Note: Testing showed that in some very rare cases, the amount calculated by eReporting for entry in DBUL may be less than zero (a negative number). In such cases, eReporting will post $0.00 as a DBUL contribution. In no case can the employer contribution to the DBUL be less than zero (a credit).

** Please note the final Pension and OPEB rate split may not be final until May. The percentages could change if legislation passes that impacts the rates splits.

For purposes of reporting and posting, the rate split between Pension and Other Post Employment Healthcare Benefits is applied to each payroll upon processing by the Division. The tables below provide the rates used to post all employer contributions between Pension and Healthcare.

FY17 PERS Past Service Cost Rate

** Please note the final past service cost rate may not be final until May. The past service rate could change if legislation passes that impacts this rate.

PERS employers that have amended their participation agreement to terminate participation of a department, group or other classification of employee shall pay the past service cost associated with the terminated positions per AS 39.35.625(a). The fiscal year 2017 Past Service Cost rate is 16.02%.